With fuel prices going up once again at midnight on 28 February 2023, faltering consumers are dealt another severe blow.
Seeing as the biggest reason for the increase is the poor rand, the only solution is to elect a new government in 2024, which can restore economic confidence.
Petrol will increase with R1,27 per litre and diesel with 30c or 31c, depending on the sulphur content.
Four factors determine this price: The international price of Brent crude oil; the value of the rand; administrated costs that reflect the transport of crude oil products from abroad and in South Africa; and taxes.
Consumers have more than enough reason to complain about how their tax money is spent, which links directly with the quality of governance.
Besides, any concessions in fuel levies must be recovered from elsewhere. Administrated costs can be recalculated, but will make a difference of a few cents at the most.
The price of crude oil is outside of government’s control, but is currently not exorbitant.
In contrast, the rand has been at more than R15 per American dollar – the currency in which crude oil is purchased – for the longest ongoing period in history.
The value of a country’s currency is often used as a barometer to indicate the level of confidence its economy instils.
The fact that part of the South African Reserve Bank’s mandate is to protect our currency confirms that the value of the rand is significant.
That mandate can, however, not be fulfilled when corruption is rampant and apparently, ensuring power supply is not even important enough to put a stop to it.
While there is no short-term solution, South Africans are at the mercy of fluctuations in the market.
If a coalition government comes into power after the 2024 elections, it can implement accountability and investor-friendly economic policy, which will put the rand – and fuel prices – on a difficult road to recovery.
Most importantly, people must realise that the foundations of the South African state are busy crumbling.
While more favourable economic policy will go some way, it is imperative to create stability by aligning the state’s constitutional foundations with the reality of its geographical and cultural diversity.
Before that happens, stability will not be sustainable and neither will confidence.
Read the original article in Afrikaans by Dr. Wynand Boshoff on FF Plus